Thursday, 30 June 2011

The Financial Policy Committee is now in session

A deep failing of the former tri-partite arrangement for regulating financial services in Britain was that the Bank of England held formal responsibility for ensuring financial stability, but had no actual means of putting said responsibility into practice. Instead, it was left to cheer or not from the sidelines while the people with actual power - the FSA and the financial institutions themselves - played their deeply destructive games.

That the FSA still can’t manage to publish its report into the RBS disaster provides a practical example of its deep, practical incompetence. That its most senior figures have admitted how prior to the credit crunch they focused too much on the risk attached to individual institutions as opposed to systemic risk (we’re stuck in the arse-hole of a systemic crisis) and did so firmly believing in the efficient market hypothesis (this is noncy bollocks, they simply assumed the financial services industry wasn’t driven by greedy, short-sighted cunts who point blank refused to look further than the next quarter or next half year’s results regardless of whether doing so blew everybody’s feet off), compounds this by making clear they were looking in the wrong direction and didn’t understand what they were looking at anyway.

Thankfully(?), the lovely new interim Bank of England Financial Policy (i.e. stability) Committee resolves both these issues of responsibility without power and regulation by shitwits through its membership, which makes clear who the daddy is these days;

- Mervyn King, Governor of the Bank of England is the chair
- Paul Tucker, also Bank of England, is the chair when Mervyn is unavailable
- Charlie Bean, also Bank of England, is a member as is
- Paul Fisher, Bank of England, and
- Andy Haldane, Bank of England

See a pattern? Actually, it would have been even more pronounced except Sir Richard Lambert, former Bank of England monetary policy committee member chose not to join at the last minute, which leaves:

- Adair Turner, FSA chairman (but not Chair of the FPC and not even its deputy chair) and
- Hector Sants, FSA Chief exec

There’s a coupla other bods, one a retired investment banker who used to work in a US investment bank and the other an ex US federal reserve cunt (err hang on a mo does that mean US banks are viewed as so much of a threat to the stability of the British financial system senior figures are required to assess how much of a threat it is and how to manage it?). There’s mebbe someone else from the Treasury as well, but fuck it, this is a Bank of England production, which is funny cos I mean seriously, the idea that terribly lovely Hector or “public intellectual” Adair could ever hold there own with the Bank of England boys is a farce.

What rammed all this home to me was hearing some Bank of England financial stability bod giving a presentation the other day. It wasn’t so much the content, rather it was their manner; the near palpable sense of excitement about the extent to which the FSA has been made their bitch. Like back in the day the Bank would identify what they considered to be a problem, do some analysis, some charts and what no and that’d be it. Now? The FSA, that’s Adair and Hector, is the Bank of England’s bitch and will do what they‘re fucking told when they are fucking told and fucking like it, which is funny cos I was reading some of the usual financial journalist shit yesterday and they actually thought some of the actions being taken by the FSA were actually FSA initiatives, as fucking if (so there’s been a fundamental shift in power people ain’t cottoned on to yet that needs brought out a tad more than it has been so far).

Anyhoo, if you want proof of the FSA’s new and significantly lesser status just check out the FPC’s minutes and all the ways its recommendations sets out what the FSA will do on its behalf. Like for one there’s tacitly introducing counter-cyclical capital provisioning (at least until the various Basel shite gets sorted), then there’s the FPC agreeing to advise the FSA to tell banks to beef up all their reporting of exposures to sovereigns on an ongoing basis, to provide additional detail on forbearance, the potential threat of the moment, and so on. In essence the FSA has been reduced to the Bank of England’s tool, which is cool cos the FSA is full of them. It also means Hector and Adair are Mervyn‘s bitches. Lets hope he at least uses spit. Actually, given how fucking shite the FSA was and is and how much they still get paid, lets not.

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